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Legal Minds

25 July 2018 / by / in

Theresa May’s Brexit negotiation team under serious pressure to make significant progress as businesses quit UK courts

English courts have historically been the first choice for many companies to govern their contracts, with London being a top destination for companies to bring litigation. However, fears that Brexit now threatens the UK’s position and the dominance of the legal sector continue to cause serious concern according to new research published this week.

A survey conducted by Thomson Reuters of businesses with an international aspect found that 35% of those polled have changed the dispute resolution clauses in their contracts from the English courts to now be heard in courts elsewhere, 51% of which have chosen EU jurisdictions such as France or Germany.

It is reported that in 2016 the popularity of the English courts helped legal services generate £31.5bn for the UK economy, along with a trade surplus of £4bn. However, companies are now uncertain as to whether the UK will continue to benefit from a regime whereby judgments are still recognised in other EU member states, leading some firms to look elsewhere.

Other firms are preparing to take a “wait and see” approach, with 39% of those who are yet to alter their arrangements stating that they intend to review contracts and will consider selecting different jurisdictions if Theresa May’s Brexit negotiating team fails to make significant progress by March 2019 on the question of what legal regime will apply after Brexit.

Jim Leason, a vice-president at Thomson Reuters said, “London has a long-standing reputation as a global legal centre. However, a poor outcome from Brexit could result in work and talent pivoting away from the UK legal services sector.”

This comes at a time when the London courts have become increasingly international and reliant on litigants from around the world, with 59% of 158 cases heard in the commercial courts in 2017/18 involving litigants from outside the UK, contributing to a 22% increase in the total number of litigants using the commercial court.

With around 8 months to go until the March 2019 deadline, it will be interesting to see the progress, if any, that the Brexit negotiation team are able to make in this regard and the effects that this will have on the English courts.

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